Dollar stores have undergone an extreme makeover in recent years, emerging as the star performers of the retail sector amid a down economy.

Now the nation's biggest dollar chains are turning to so-called "sin items" to churn even more sales.

Family Dollar and
Dollar General spruced up their once-dingy digs and stocked them with more food and national brands -- like
Kelloggs and Tide -- are angling for fatter profit margins with a bold push into cigarettes, wine and beer.

While the dollar chains have been operating at peak margins and sales, the question now is, “how will that be sustained?” Michael Keara, an equity analyst with
Morningstar, told Forbes.com.

That question has become more pressing as Dollar General and Family Dollar look to fend off the accelerated expansion of Wal-Mart’s answer to the dollar store: Its small format Neighborhood Market spin-off.

One counterattack is to add “sin items” like cigarettes and liquor, which are “always a great traffic driver” and generate higher profit margins than food, for example, Keara said.

As part of Family Dollar's strategy to expand merchandise that generates the most frequent purchases, such as food and healthy and beauty items, Family Dollar added cigarettes to approximately 6,000 of its 7,300-plus stores this summer via a partnership with McLane, the nation’s largest distributor of tobacco products.

Cigarettes are also filling an unmet shopper desire, Bryn Winburn, public relations manager for Family Dollar, told Forbes.com.

“We know our customer over indexes in tobacco use,” she said. "Our goal is to be relevant to our customer and meet her needs every day… Our target customer is the one that previously had to purchase those products elsewhere.”

Family Dollar’s average shopper is a female head of household in her mid 40s who earns less than $40,000 a year -- which befits a common profile of the everyday smoker in the U.S.

Indeed, low-income Americans, Family Dollar's core shoppers, smoke more than higher-income earners. According to the Centers for Disease Control and Prevention, of adult smokers in the U.S., 28.9% live below the poverty level, while 18.3% of smokers live at or above the poverty level.

Today, Family Dollar carries all of the major cigarette brands and "we price them competitively,” Winburn said.